Memorandum

City of Lawrence

City Manager’s Office

TO:	Tom Markus, City Manager
FROM:	Budget Team
DATE:	July 26, 2016
RE:	2017 Budget Public Hearing

Background

Pursuant to action taken by the City Commission at its July 19, 2016 meeting, notice of a public hearing to be conducted on August 2, 2016 was published on July 22, 2016 in the Lawrence Journal World. The purpose of the public hearing is to receive and respond to questions of citizens related to the 2017 proposed budget. Pursuant to statute, the notice of budget hearing and budget summary established the maximum expenditure limits of the 2017 budget. Subsequent to the public hearing, the City Commission can lower, but cannot raise, the maximum expenditure level.

City Manager’s 2017 Recommended Budget

As presented on July 12^th, the City Manager’s Recommended Budget included operating and capital expenditures of $191,010,435 and maintained a flat property tax rate of 31.488 mills compared to 2016. In addition to operating and capital expenditures, fund balance of $74,170,355 was also budgeted to meet statutory requirements. The City’s total budget includes 40 distinct funds but only 30 funds are included in the certified budget as required by State Statute. The remaining 10 funds are reported in the budget document for transparency. The attached chart explains the arrangement of these funds (TDD/TIF/NRA Funds are consolidated in the chart). The remainder of this memo addresses the funds included in the State certified budget. These funds totaled $240,299,667 in the City Manager’s Recommended Budget (operating and capital expenditures = $171,320,995; fund balance = $68,978,672).

The Recommended Budget was balanced through growth in revenue, reductions in expenditures, and deferral of operational and capital requests. Expenditure reductions and deferrals are detailed in the City Manager’s transmittal memo (Recommended Budget pg. 5). Revenue growth is budgeted in several sources, including property taxes due to growth in the assessed valuation and Solid Waste fees (Ord. No. 9261), Stormwater fees (Ord. No. 9265) and parking fine adjustments (Ord. No. 9266). These ordinances were adopted on July 12^th (see July 5^th agenda for corresponding memos). Additionally, adjustments to the Water and Sewer Utility fees were adopted on August 11, 2015 (Ord. No. 9122; see August 4, 2015 agenda for corresponding memo).

Changes to the Recommended Budget

On July 19^th the City Commission directed staff to set the date of the statutorily required public hearing and establish the maximum expenditure level for the 2017 certified budget. As directed by the Commission, the maximum expenditure level was set at $240,779,935 which is $480,268 more than the Recommended Budget. The increase is funded by property tax revenue, requiring an estimated tax rate increase of 0.530 mills. As set by the Commission, the maximum tax rate for 2017 is 32.018 mills, up from the 31.488 mills required to fund the 2016 budget. The attached chart details the adjustments made to the 2017 Recommended Budget, including the impact on property tax funding, the mill levy and fund balances.

If included in the adopted budget, the tax rate increase will reinstate funding for two positions totaling $168,267 in additional General Fund expenditures. These positions, which were not funded in the Recommended Budget, include the Director of Arts and Culture ($105,697) and the City Auditor ($62,300 in General Fund plus $62,300 in Water Utilities Fund). The increase will also reinstate full funding for the City’s longevity payment program, an additional $57,076 in the General Fund. Reinstatement of the full longevity program in all other funds will total $29,836 and will be funded out of fund balances in those funds. Additionally, maximum expenditures in the Library Fund were increased by $255,195 (0.282 mills) in order to increase the City’s appropriation to the Lawrence Public Library.

Capital Improvement Program Update

In establishing the maximum expenditure level, no changes were made to the Capital Improvement Program (CIP) as published in the Recommended Budget. The Recommended Budget does, however, include adjustments compared to the draft CIP presented to the Commission at its May 24^th study session. The attached chart details those adjustments.

Budget Calendar and Additional Information

The budget calendar includes the following upcoming deadlines.

Tue, Aug 2^nd	Public hearing Budget ordinance adopted on first reading
Tue, Aug 16^th	CIP adopted by City Commission Budget ordinance adopted on second reading
Fri Aug 19^th	Budget ordinance published
Thur Aug 25^th	Statutory deadline to file budget with County Clerk

Additional information related to the 2017 budget, as well as responses to questions received by commissioners and the public are maintained at the following City webpage: http://lawrenceks.org/budget.

Recommended Action

Conduct the public hearing regarding the 2017 budget and consider adopting Ordinance No. 9274, adopting the 2017 Operating Budget and Capital Improvement Program, on first reading.